SBI net dips on high tax provision in Q2

BS 200 SCORECARD

State Bank of India has reported 2.54 per cent drop in net profit at Rs 1,184.49 crore for the second quarter (ended September 30) against Rs 1,215.36 crore in July-September 2005.

The high provision for tax in Q2, which grew 11-fold (1,113.96 per cent) to Rs 606.74 crore in the period from Rs 49.98 crore last year, made dent in the bank's net profit.

The profits were lower if seen against the backdrop of one-time items such as interest on IT refund of Rs 712 crore in April-September 2005.

The country's largest commercial bank's total income for the quarter rose to Rs 10,811.23 crore from Rs 9,856.04 crore in Q2 FY06. The interest income on advances rose an impressive 37.07 per cent to Rs 5,901.71 crore from Rs 4,305.55 crore a year ago.

The drop in net profit for the second quarter and the first half of 2006-07 should be seen in the backdrop of one-time items such as the interest on income tax refund (Rs 712 crore) and much higher tax provision in the same period last financial year, SBI Chairman O P Bhatt said.

The state-run banking major's non-interest income, including commission and profit on sale of investments, for the quarter rose 10.75 per cent to Rs 1,433.76 crore.

Its deposits also increased by a similar rate of 10.77 per cent to Rs 3,92,615 crore from Rs 3,54,442 crore (excluding Indian Millennium Deposits) a year ago. The share of low-cost deposits rose from about 39 per cent to per cent to 42.64 per cent.

The focus on salary and new accounts and leveraging ATM network with balance in accounts ranging Rs 15,000-20,000 crore helped SBI increase its share of low-cost deposits. The cost of deposits, on the other hand, fell to 4.51 per cent from 4.64 per cent.

The bank's gross advances rose 21.18 per cent to Rs 2,88,840 crore from Rs 2,38,351 crore at the end of September 2005. The retail advances now constitute 25.75 per cent of domestic advances against 24.73 per cent last year. The yield on advances rose sharply from 7.81 per cent to 8.56 per cent.

The yield on investments dipped slightly to 7.39 per cent from 7.40 per cent. The net interest margin moved up to 3.32 per cent from 3.12 per cent at the end of September last year.

The gross non-performing assets (NPAs) were down to 3.57 per cent from 5.26 per cent a year ago. The net NPAs stood at 1.67 per cent against 2.27 per cent.

SBI's capital adequacy ratio improved to 12.63 per cent from 11.30 per cent. The tier-I adequacy ratio moved up to 8.74 per cent from 7.95 per cent.